Select AFSL director sees stay order dismissed
Former Select AFSL and BlueInc Services managing and sole director, Russell Howden, has had a stay order dismissed by the Federal Court as he awaits the outcome of an appeal.
In July, Howden was penalised $100,000 for breaching his director duties and was disqualified from managing corporations for five years.
The case, brought by ASIC, concerned the mis-selling of insurance over the phone to consumers, including First Nations consumers from remote communities where English was not their first language.
On 24 July, Howden filed a notice of appeal on the grounds that the primary judge erred in determining the incentives were conflicted remuneration.
In a judgment on 4 August, Justice Goodman dismissed Howden’s stay application which was heard on 1 August.
The court found that there was “insufficient evidence to stay the disqualification, pecuniary penalty or costs orders” that had been made against Howden in the original verdict from Justice Abraham.
ASIC has provided an estimate of its recoverable costs in the order of $2.3 million to $3.1 million.
Howden had argued in the Federal Court that the ban would affect his ability to earn a living in his chosen field.
His counsel argued: “The disqualification order would prevent him from earning a living in his chosen field, namely the management of financial services companies, in circumstances where he has earned a living by managing financial services companies for over 32 years. In particular he is concerned that the breadth of section 206A of the Corporations Act would significantly limit him acting as an employee or contractor in that area.
“Further, because he is 64 years old, he does not believe it would be easy for him to find suitable employment in another field. Thus, he believes that there is a real risk that the disqualification order would effectively force him into early retirement.
“The disqualification order would also have a detrimental impact on his standing in the insurance industry, as it would exacerbate the negative findings in the liability and penalty judgments, as well as the negative publicity that he had experienced in connection with the first instance proceeding and the underlying events.”
The second consequence of the disqualification order suggested by Howden asserted that the disqualification would “significantly disrupt the operations and growth” of BlueInc as the firm would be unable to find someone to replace him in the short to medium term.
Justice Goodman said there had been no evidence of attempts made to source a replacement, and that Select and BlueInc Services are in external administration. Nor did Justice Goodman accept the idea that he would be prevented from earning a living as he did not determine Howden was dependent on those earnings.
“For the reasons set out above, the interlocutory application should be dismissed with the costs of the application being reserved until the outcome of the appeal is known.”
AUTHOR
Laura Dew
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